Financial Daily from THE HINDU group of publications
Wednesday, May 22, 2002
STC hogs limelight
KOLKATA, May 21
THE market has begun to sniff hidden value in the stock of State Trading Corporation (STC), listed for divestment. The counter hit the all-time high of Rs 67.50 on Tuesday on the Bombay Stock Exchange.
Opening at Rs 56.20, the scrip hit the upper circuit breaker and closed with an inter-session gain of 20 per cent. In two consecutive days, the STC scrip has moved up smartly by Rs 20.65.
Incidentally, trading in the stock resumed on Monday after a long gap since February 13. The BSE had stopped dealing in the shares because the company had fixed the period between February 25 and 27 for book closure in the wake of a proposed capital reduction to the tune of 30 per cent. However, the proposed restructuring plan has since been withdrawn. It informed the BSE recently about the cancellation of the earlier plan, but did not provide any reason for the move.
Mr A.K. Gupta, Company Secretary, told Business Line today that it was a decision by the Government. Accordingly, the proposal placed before the Department of Company Affairs was withdrawn, Mr Gupta added.
As on September 30, 2001, the Union Government held 91.02 per cent in STC. The combined holding of the MFs, UTI, banks and FIs was 7.09 per cent. The public holding is placed at 1.88 per cent.
The proposed reduction in the paid-up capital from Rs 30 crore to Rs 21 crore was to have caused an outflow of over Rs 13 crore for the company and the Government would have been benefited most by the proposed capital reduction plan.
Though the market players are intrigued by the withdrawal of the capital restructuring proposal after getting it approved at an EGM in January this year, they feel that the proposed pricing of Rs 14.65 for every share of Rs 10 for the purpose of cancellation would have been an under-valuation.
"The move may be linked to the divestment plan of the Rs 1,040 crore company. The divestment details are expected to be unfolded soon," said a BSE broker.
The accounts for 2001-02 have not been approved by the STC board yet, but according to market estimates, the net profit is likely to go up to Rs 8.5 crore, up from the Rs 3 crore in 2000-01.
For 2000-01, the company had paid a dividend of 20 per cent.
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